President Trump’s ‘skinny budget’ puts the federal government on a major diet

This past Friday, President Trump released his 2026 budget outline, proposing the largest cuts to non-defense spending in decades and zeroing out dozens of programs across the federal government. In line with much of what the President has already done in his first 100 days, the cuts are deep enough to alarm not just Democrats, but moderate Republicans as well, and time will tell if the proposal will get any real consideration by Congress.

The budget outline, often called a ‘skinny budget’, outlines the top-line spending levels for each agency and a summary of highlights from the 100+ page detailed budget proposal that the President will officially submit to Congress in the next month or so. While not comprehensive, the outline does include a long list of agencies or federal programs that the President would like to fully defund or consolidate, such as the popular Commodity Supplemental Food Program and Corporation for Public Broadcasting. Another major target for cuts is grant programs through the USDA for rural housing, community facilities and water/wastewater infrastructure.

By the numbers: The budget outline proposes to cut non-defense discretionary spending by more than 22%, or about $160 billion, while keeping the defense spending level. The State Department is the hardest hit, with more than 80% of its budget proposed to be cut. The Departments of Health and Human Services and Housing and Urban Development also each see a $33 billion decrease, representing 25 and 46 percent of their budgets respectively.

Not included in the budget are details about Department of Justice antitrust enforcement funding, Department of Commerce domestic programs, or the dozens of independent agencies like the Federal Trade Commission and Securities Exchange Commission. While this Administration has generally shifted towards a more populist antitrust enforcement posture, cuts to the DOJ could severely limit the practical impacts of this shift in policy.

Privately, Republicans in Congress are telling key stakeholders that they will not follow-through with many of the proposed cuts, and regardless, any federal spending bill will need some Democratic votes to clear the Senate. Many Democrats are already saying that this budget is dead in the water, and that the only way they will support even a Continuing Resolution is if Republicans commit to requiring President Trump to fully utilize the money Congress has already appropriated.

We’ll see more details about the budget in the next month or so, along with a first look at whether Congressional Republicans will follow through as they release draft 2026 appropriations bills, which typically happens in May and June. Suffice to say, we expect a turbulent summer legislative session and a typical September scramble to try and keep the government open when funding expires on September 30, 2025.

Ash Arnett is a Senior Associate at PACE Government Affairs. He represents NACM and the credit profession on issues impacting business credit.